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Options Strategy Poster

The document discusses various options strategies for investors with different market outlooks. It provides examples of bullish, bearish and neutral strategies and explains their risk, reward, and sensitivity to factors like volatility and time decay. Bullish strategies like long calls benefit from rising markets. Bearish strategies like long puts benefit from falling markets. Neutral strategies like short straddles benefit from low volatility. The document aims to help investors choose the right strategy based on their market outlook.

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Mark Taylor
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5K views1 page

Options Strategy Poster

The document discusses various options strategies for investors with different market outlooks. It provides examples of bullish, bearish and neutral strategies and explains their risk, reward, and sensitivity to factors like volatility and time decay. Bullish strategies like long calls benefit from rising markets. Bearish strategies like long puts benefit from falling markets. Neutral strategies like short straddles benefit from low volatility. The document aims to help investors choose the right strategy based on their market outlook.

Uploaded by

Mark Taylor
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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PC21540_N 30/5/03 7:48 AM Page 1

ASX Options
Clever products for clever investors
BULL STRATEGIES
Overall, these positions will do better if
the stock or index market rises.

NEUTRAL STRATEGIES

BEAR STRATEGIES

Overall, these positions will do better if the stock or index market does not move very much.

Overall, these positions will do better if


the stock or index market falls.

Synthetic Long

Long Butterfly

Short Straddle

Synthetic Short

Example:
Buy 1 Call and Sell 1 Put at the same strike
Market Outlook: Bullish
Risk:
Substantial
Reward:
Unlimited
Increase in Volatility: Neutral
Time Decay:
Neutral

Example:
Sell 2 Calls, Buy 1 Call at higher strike and
Buy 1 Call at lower strike
Market Outlook: Neutral
Risk:
Limited
Reward:
Limited
Increase in Volatility: Typically hurts position
Time Decay:
Typically helps position

Example:
Sell 1 Call and Sell 1 Put at the same strike
Market Outlook: Neutral
Risk:
Unlimited
Reward:
Limited
Increase in Volatility: Hurts position
Time Decay:
Helps position

Example:
Buy 1 Put and Sell 1 Call at the same strike
Market Outlook: Bearish
Risk:
Unlimited
Reward:
Substantial
Increase in Volatility: Neutral
Time Decay:
Neutral

ASX OPTIONS SINCE 1976


Long Call

Contracts Traded
16,000,000

Index Points
4000
Retail option
courses commenced

14,000,000

Margin lending
as collateral

87 market correction

10,000,000

2500

8,000,000

2000

6,000,000

1500

4,000,000

Automated trading
introduced CLICK

2,000,000

O/seas market
makers introduced

1000

Example:
Buy 1 Put
Market Outlook: Bearish
Risk:
Limited
Reward:
Substantial
Increase in Volatility: Helps position
Time Decay:
Hurts position

500
0

75/76
76/77
77/78
78/79
79/80
80/81
81/82
82/83
83/84
84/85
85/86
86/87
87/88
88/89
89/90
90/91
91/92
92/93
93/94
94/95
95/96
96/97
97/98
98/99
99/00
00/01
01/02

Call Backspread

3500
3000

12,000,000

Example:
Buy 1 Call
Market Outlook: Bullish
Risk:
Limited
Reward:
Unlimited
Increase in Volatility: Helps position
Time Decay:
Hurts position

Long Put

Options Volume

Put Backspread

All Ords Index

THE OPTIONS STRATEGY SPECTRUM


Example:
Sell 1 Call and Buy 2 Calls at a higher strike
Market Outlook: Bullish
Risk:
Limited
Reward:
Unlimited
Increase in Volatility: Typically helps position
Time Decay:
Typically hurts position

Bullish

Buy Write

Example:
Buy 1000 shares and Sell 1 Call
Market Outlook: Neutral to Slightly Bullish
Risk:
Substantial
Reward:
Limited
Increase in Volatility: Hurts position
Time Decay:
Helps position

Bearish

write
straddles or
combinations

Bull Spread

Example:
Buy 1 Call (Put) and Sell 1 Call (Put) at higher
strike
Market Outlook: Moderately Bullish
Risk:
Limited
Reward:
Limited
Increase in Volatility or Time Decay:
Helps or hurts depending on strikes chosen

Neutral

bull
spreads
buy stock, sell call
buy bonds, sell put
buy call

Short Butterfly

Example:
Buy 2 Puts, Sell 1 Put at higher strike and
Sell 1 Put at lower strike
Market Outlook: Strong move in either direction
Risk:
Limited
Reward:
Limited
Increase in Volatility: Typically helps position
Time Decay:
Typically hurts position

Example:
Sell 1 Put and Buy 2 Puts at a lower strike
Market Outlook: Bearish
Risk:
Limited
Reward:
Substantial
Increase in Volatility: Typically helps position
Time Decay:
Typically hurts position

Bear Spread

bear
spreads
overwrite
buy protective put
buy put

Long Straddle

Example:
Buy 1 Call and Buy 1 Put at the same strike
Market Outlook: Strong move in either direction
Risk:
Limited
Reward:
Unlimited
Increase in Volatility: Helps position
Time Decay:
Hurts position

Example:
Sell 1 Put (Call) and Buy 1 Put (Call) at higher
strike
Market Outlook: Moderately Bearish
Risk:
Limited
Reward:
Limited
Increase in Volatility or Time Decay:
Helps or Hurts depending on strikes chosen

Short Call

Example:
Sell 1 Call
Market Outlook: Neutral to Slightly Bearish
Risk:
Unlimited
Reward:
Limited
Increase in Volatility: Hurts position
Time Decay:
Helps position

Supplied by ASX Options Business Development. Visit asx.com.au/options or call 1300 300 279 for more information on the range
of courses available to both investors and brokers. Options courses are accredited for both structured & unstructured CPD points.
Information provided by ASX does not constitute advice or recommendation of a particular product or class of product and investors should consider obtaining independent advice before making any financial decisions. ABN 98 008 624 691

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